Investors optimistic on hedge funds

Hedge fund managers and, apparently, their investors remain optimistic despite the global economic crisis and the broadly negative impact on their performance, according to a new Deutsche Bank survey.

The Deutsche Bank Alternative Investment Survey, released this week, sampled the views of over 1,000 investors and revealed that investors remained optimistic about the performance of the hedge fund industry this year, with over 50 per cent predicting the hedge fund index would produce returns of between zero and 10 per cent this year, while 40 per cent expected their own hedge fund portfolios to generate returns of between 5 and 10 per cent.

Commenting on the survey, the co-head of global prime finance at Deutsche Bank, Barry Bausano, said despite the unprecedented challenges faced in 2008, the survey indicated resiliency in the hedge fund industry.

He said in terms of region, 46 per cent of respondents expected equity markets in the US and Canada to offer the best returns in 2009, with China and Asia excluding Japan expected to be the second and third best performing regions for equities.

According to the survey, transparency and risk management are now among the top five issues for investors with respect to manager selection, while the research also revealed that 72 per cent of investors had reduced their exposure to leverage and 63 per cent were not interested in applying leverage to their own portfolios.